L&T Finance Holdings drops after muted Q3 outcome

L&T Finance Holdings fell 6.05% to Rs 119.55 after consolidated net profit rose 1.9% to Rs 591.03 crore on 8.44% increase in total income to Rs 3,735.79 crore in Q3 December 2019 over Q3 December 2018.

Consolidated profit before tax (PBT) slipped 6.5% to Rs 725.22 crore in Q3 December 2019 as against Rs 775.81 in Q3 December 2018. The result was announced after market hours on Friday, 17 January 2020.

The diversified non-banking financial company (NBFC) continued to maintain steady net interest margin and fee income, growing it to 7.29% in Q3 December 2019 against 6.79% a year ago. Pre-provisioning operating profit (PPOP) stood at Rs 1,334 crore for Q3 December 2019, up 12% year on year.

The NBFC said it continued to deliver top quartile return on equity at 16.51% and its focused lending book expanded 14% year on year. It serviced over 1.19 crore customers through 223 branches and 1,450 meeting centres during the quarter.

The company raised more than Rs 10,000 crore in long-term borrowing during the quarter, which was its highest quarterly borrowing since FY17. It also sold a public issue of secured NCDs, which was oversubscribed 3.01 times the base issue size of Rs 500 crore and the issue was closed on the second day.

The company also effectively tapped PSL funding of Rs 1,818 crore in Q3 December 2019. The weighted average cost of funds remained steady at 8.54% in Q3 December 2019 against 8.50% in Q3 December 2018 and 8.61% in Q3 December 2019 despite diversification. The CP proportion fell from 16% to 9% YoY as long-term borrowing increased.

The company further said it continued to strengthen the balance sheet by concentrating on the focused lending businesses like rural finance, housing finance and infrastructure finance, while running down the defocused businesses.

Commenting on the financial results Dinanath Dubhashi, managing director & CEO, said, "NBFCs with strong parentage, AAA credit rating and prudent business practices have stood out and asserted their strength over the past year. Our robust business model, diverse sources of funding, steady growth and focus on asset quality, arein line with our strategy of building a stable and sustainable business. We have shown consistent performance across our focused businesses while building our inherent strengths to ensure better than industry performance when demand picks up."

In the past one month, the scrip grew 2.53% to its current market price of Rs 119.55, outperforming Nifty Financial Services index's 0.94% fall in the same period.

L&T Finance Holdings is a leading diversified non-banking financial company (NBFC).

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